257 F.

2d 747

EMPRESA CENTRAL MERCANTIL DE

REPRESENTACOES, LTDA., Libellant-Appellee,
v.
REPUBLIC OF THE UNITED STATES OF BRAZIL, doing
business
under the name and style of Lloyd Brasileiro,
Respondent-Appellant.
No. 354, Docket 24946.

United States Court of Appeals Second Circuit.

Argued May 7, 1958.
Decided July 17, 1958.

Purrington & McConnell, New York City (Frank J. McConnell, James D.

Brown, New York City, of counsel), for appellant.
Bigham, Englar, Jones & Houston, New York City (F. Herbert Prem, New
York City, of counsel), for appellee.
Before WATERMAN and MOORE, Circuit Judges, and GALSTON,
District judge.
WATERMAN, Circuit Judge.

On October 8, 1951 the Lloyd Brasileiro, an ocean carrier owned by the

Republic of Brazil, received at its dock in New York twenty-two skids of
silicon steel sheets for shipment to the consignee, Empresa Central Mercantil
de Representacoes, Ltda., a Brazilian corporation, in Rio de Janeiro. Lloyd
acknowledged receipt of these skids by issuing two dock receipts stating
'Wrappers torn sheets badly rusted' and 'Outside containers badly rusted.'
Despite its knowledge that the steel sheets were damaged, Lloyd, through the
connivance of the shipper, Ameximpo, Inc., issued a clean bill of lading to
Empresa's forwarding agent, stating that the steel sheets had been received in
'apparent good order and condition.' It is conceded that the issuance of the clean
bill of lading was a wrongful act and a fraud upon Empresa, because Empresa

had agreed with the shipper to pay, and did pay, for a clean bill of lading.
2

During November 1951 the steel sheets were carried on board the S.S. Loide
Guatemala, one of Lloyd's vessels, from New York to Rio de Janeiro, arriving
there on December 2. The twenty-two skids were discharged to the Customs
Heavy Material Deposit sometime from December 6 to December 12, at which
time the Port Authority certified that they were 'damaged.' Empresa's customs
house broker reported to Empresa that the steel sheets were rusted. About
December 15 the underwriter sent a chemist, Baretto, to examine the steel
sheets. His analysis revealed that the rusting was due to contact with fresh
water. The underwriter then sent an experienced cargo surveyor, Ramos, to
inspect the shipment. Ramos' examination disclosed that fourteen skids were 'in
very bad condition,' the sheets being extensively dented and pitted with rust.
The remaining eight skids were also badly rusted, but in much better shape than
the fourteen. After making inquiries of steel merchants in Rio de Janeiro with
respect to the market value of sound steel sheets and of the damaged sheets,
Ramos prepared a report concluding that the market value of undamaged steel
sheets was 15,00 cruzeiros per Kilogram, and that the market value of the
damaged sheets was 6,20 cruzeiros per kilogram for the fourteen skid lot and
13,20 cruzeiros per kilogram for the eight skid lot.

Empresa then brought this admiralty proceeding to recover for rust damage to
the steel sheets. An interlocutory decree in favor of Empresa was entered by the
district court after Lloyd admitted that the steel sheets were damaged when
received by it, and the matter was referred to a commissioner for ascertainment
of the damages. Thereafter the commissioner concluded that Empresa had not
proved the extent of its damages and was not entitled to a recovery. The district
court sustained Empresa's exceptions to the commissioner's report and directed
the commissioner to file an amended report fixing the damages. 147 F.Supp.
778. Ultimately the damages were fixed at $11,944.44, in accordance with
Ramos' report, and the district court rendered a final decree in favor of Empresa
for that amount plus interest and costs, being a total of $16,728.85. Lloyd
appealed from this decree.

Since Lloyd concedes its liability to Empresa, the only issue raised by this
appeal is whether damages were properly proven. Lloyd contends (1) that the
market value of undamaged silicon steel sheets in Rio de Janeiro in December,
1951 was not established by credible and competent evidence; (2) that proof of
the market value of the damaged steel sheets was similarly deficient; and (3)
that Empresa is liable for aggravation of damages occurring after discharge of
the shipment at Rio de Janeiro. We think that these contentions are without
merit.

The market value at Rio de Janeiro in December, 1951 of steel sheets in sound
condition was established by the opinion evidence of Ramos. He canvassed
seven Rio de Janeiro steel merchants engaged in the buying and selling of steel
sheets and testified that the market value was 15,00 cruzeiros per kilogram. In
addition, the replacement value of the steel sheets was shown by the invoice
cost plus ocean freight and insurance premium. Cf. Waterman S.S. Corp. v.
United States S.R. & M. Co., 5 Cir., 1946, 155 F.2d 687, 694.

The market value of the steel sheets in their damaged condition was established
by the opinion evidence of Ramos. He examined the physical damage to the
steel sheets, gave his estimate of the depreciation in their value, obtained bids
from local steel merchants for the fourteen skids which were most badly
damaged, and accepted the highest bid as representing their market value. It
must be remembered that physical damage to the steel sheets at the time of their
receipt was conceded by Lloyd, and that its wrongful act in issuing a clean bill
of lading at the request of the shipper was a fraud upon Empresa. See Olivier
Straw Goods Corp. v. Osaka Shosen Kaisha, 2 Cir., 1931, 47 F.2d 878, 74
A.L.R. 1378; Higgins v. Anglo-Algerian S.S. Co., Ltd., 2 Cir., 1918, 248 F.
386. Moreover, Lloyd, although requested to do so, refrained from participating
in the survey. Under the circumstances, we do not think it can complain
because Empresa did not adduce the highest character of proof. Cf. The
Rosalia, 2 Cir., 1920, 264 F. 285, 290.

The steel sheets were discharged from the S.S. Loide Guatemala on or before
December 12, 1951. They remained at the Customs Heavy Materials Deposit
from the time of discharge until January 15, 1952 when they were moved to
Empresa's warehouse. Lloyd argues that its responsibilities ended when the
shipment was discharged, that the steel sheets suffered further damage while
stored in the open at the Customs Heavy Materials Deposit, and that Empresa
did nothing to prevent further damage. However, the record contains no proof
of the existence or the extent of further damage during this period, and we think
that in view of the admitted fraud it perpetrated on Empresa, Lloyd had the
burden of proving any aggravation of damages. Cf. Armco International Corp.
v. Rederi A/B Disa, 2 Cir., 1945, 151 F.2d 5. Since it failed to show any
additional damages after discharge, Lloyd is liable for the entire damages
proven.

Affirmed.